Exam 12: Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

The period of amortization of finite-life intangible assets should be either the useful life or legal life,whichever is longer.

A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.

If the asset has a finite useful life,the company must include in their financial statement disclosures the useful life or the amortization rates used.

If the firm sells the intangible asset,it recognizes a gain or loss on the income statement,measured as the difference between the sales proceeds and the carrying value of the asset.

Acquired in-process research and development costs for viable projects should be capitalized as an indefinite-life intangible asset.

Only finite-life intangible assets are subject to amortization.

Average remaining life of a company's long-term operating assets is computed as ________.

Companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

A high fixed asset turnover ratio indicates a company is generating a large amount of revenue for each dollar invested in fixed assets.

With basket purchases,the firm allocates one purchase price to specific assets based on fair values.

Companies derecognize tangible fixed assets from their accounts when they abandon the assets.

Companies commonly report the carrying value of property,plant,and equipment in total or by major class of long-term assets on the balance sheet.

Firms compute the amount of avoidable interest as the weighted-average accumulated expenditures times the appropriate interest rate.

What type of account is Accumulated Depreciation?

The purchase of a building would involve a number of different components,such as the foundation and frame,heating and air conditioning systems,and other non-weight-bearing parts.Which of the following statements concerning the components-based approach for determining depreciation is true?

Which of the following is a realistic assumption of the straight-line method of depreciation?

Capitol Company decided to sell one of its subsidiaries,Subsidiary ABC.BiRite Inc,is the purchaser of this subsidiary.The selling price for Subsidiary ABC is $2,000,000.BiRite performed a valuation analysis of Subsidiary's ABC assets acquired and liabilities.The following table presents book values from Subsidiary ABC financial statements and fair values determined by BiRite: a.Prepare the journal entry made by BiRite to record the acquisition of Subsidiary ABC. b.Describe how the journal entry would be different if the acquisition prices was $1 million.

When a firm sells or abandons an asset,how is the gain or loss to be recognized on the income statement measured?

The capitalizable value of goodwill is always measured as a residual value.

Goodwill is recorded as an intangible asset when ________.